This week, world leaders, scientists, businesses and many others have converged on Paris for COP 21, the most significant international climate change conference since Copenhagen in 2009.
Top of the agenda will be agreeing a new climate change agreement that stops long-term global temperatures from rising by more than 2°C, the threshold predicted to result in the most devastating consequences for humanity.
It is a unique opportunity for the world’s chief decision makers to come together to take concrete action on this pressing global issue.
One of the most effective policies for tackling carbon emissions is a global carbon tax – and I’m hoping it gets the approval it deserves at COP 21.
Carbon taxes have existed for years as an effective policy instrument, but to date there has never been a mandatory global one.
World Bank research shows that 15 countries are implementing or have passed legislation for a direct carbon tax, including the UK, other European states, as well as South Africa, Mexico and Japan.
So how would a global carbon tax work? First, all carbon emissions produced by larger organisations would be subject to a tax of around $30-$40 per carbon tonne. And second, all funds raised would be invested into research that seeks to find the best green technologies of tomorrow.
As the World Bank points out, carbon taxes create incentives for emitters to shift to less energy intensive means of production, ultimately resulting in fewer emissions.
Polluting is currently free, while decontaminating is expensive. Clearly this is unfair and must change. A carbon tax would incentivise businesses to look towards more sustainable technologies and renewable energies, with the added benefit that the money raised by the tax can be invested into research and paid to those who invest to ensure their operations are carbon-free. There needs to be a system whereby the polluter pays and the environmentally conscious are supported.
Sceptics argue that a carbon tax would distort international competition, but if it were ultimately global there would be an equal playing field for all businesses. So it is important that a carbon tax is adopted across a sufficiently wide geographic area, and the transition needs to be organised to give investors sufficient warning.
At a minimum, the EU can, and must, lead on the issue by introducing its own carbon tax. While a tax would make EU goods more expensive, negative effects could be offset by a carbon customs duty on goods entering the EU.
Climate change is no longer a theoretical challenge – it is already here, with warming of 1°C so far. We need to stop waiting for disruption caused by climate change to happen and realise that we have the solutions to this problem in our hands today.
A large part of this also involves transitioning into a circular economy by giving materials a second, third or fourth life in a closed loop. Indeed, research has found that the circular economy could contribute £29bn to UK GDP and 175,000 jobs.
UK business can play an important role in preventing climate change but we need an attitudinal shift today, not tomorrow, if we are to reap the benefits in years to come.
COP 21 is a unique, potentially last chance, opportunity to cap global warming at 2°C. Let’s not waste it.